Simple logic behind this is that there have been numerous credit repair companies that used large scale disputes to unethically raise a consumer's credit score and attempt to circumvent valid items. This is obviously only a short-term fix, and does not truly repair any credit. Unfortunately, in an attempt to shut down this tactic, Fannie Mae and Freddie Mac have inadvertently penalized honest consumers who have attempted to dispute errors on their credit report. Consumers may have legal rights under the Fair Credit Reporting Act (FCRA) in disputing incomplete or erroneous information. As you can tell, these rights protected under Federal law, can sometimes be twisted against the consumers they were designed to protect!
So...where does this leave the borrower?
The applicant has no choice but to attempt to contact the account in question (credit card, car loan, mortgage, etc.) and request that they contact the credit bureaus to remove this language from the report. At times it can take 4-6 weeks, depending on the creditor and their policies.
Currently, the credit agencies; TransUnion, Equifax and Experian have policies and procedures in place to verify documentation submitted on a Rapid Rescore. More and more creditor's have policies in place not to verify verbally to a third party (bureaus included) which then creates a problem of verifying the documentation. Some creditors require verbal authorization for the consumer and some creditors require that authorization to be specific to a person or company. Verbal permissions are usually only good for 24-72 hours and must be specific, i.e.; for a particular bureau only or all bureaus. The criteria for documentation from a creditor is: 1) must be on letterhead or the creditor name must appear in the URL of internet documents, 2) documentation must reference a portion of the account number, 3) documentation must be specific to the update request such as: remove all derogatory from account and reflect 0 x 30 days and 4) documentation must be dated AFTER the date the creditor last reported. All documentation is verified..
Some items NOT accepted by the bureaus: 1) documentation not written in English, 2) emails, 3) payment receipts, canceled checks, bank statements, 4) hand written documents, 5) payment histories, 6) unrecorded court documents for public records, 7) documentation dated prior to the date the creditor last reported.
Standard turn times are 3-5 business days with the proper documentation.
While many mortgage professionals have experienced this over the past 12 months, there are still some that do not know and understand this requirement or finding in the AUS systems; it is not widely known by most realtors and consumers. The only real take away here is that when you review the credit report, you need to look at more than just "mistakes" or other negative items.
Disputed verbiage can appear on a consumer's credit file for many reasons. Here are a few: 1) Consumer contacts creditor to dispute a balance or charge on current statement, 2) Consumer contact credit agency directly either by mail or disputes online after obtaining their report from www.annualcreditreport.com and disputes an item, 3) Consumer hires a credit repair organization, 4) A Rapid Rescore is attempted and credit agency is unable to verify documentation - dispute is then registered until creditor responds.
Comments(1)